- This topic has 6 replies, 2 voices, and was last updated 5 years ago by
.
- Posts
Hi there,
When answering the below question, I answered it as a discontinued operation as Treasured Homes represents a separate major line of business of operations and has met the requirements to be classified as “held for sale”
1. Why would you include disposal groups as part of the answer though I can see how it met the criteria?
2. Also if it is both disposal group held for sale and discontinued operations. How are we presenting this in the financial statements?
June 2011 Q1 – Treasured Homes
Question:
https://www.chinaacc.com/upload/html/2013/07/01/lixingcunda0d3a8ea9444159ad4d1549e0ff52f4.pdf
Answer:
https://www.accaglobal.com/content/dam/acca/global/pdf/p7mys_2011_jun_a.pdf1. Yes it meets the criteria – but there are still associated risks of misstatement – the assets and liabilities of the disposal group must be shown separately and assets must be measured at the lower of carrying amount (no longer depreciated) and recoverable amount (which must be FV less costs to sell).
2. The discontinuance of operations is reflected in the SoPL – after “Profit for the period from continuing operations*” there will be a separate line “Profit for the period from discontinued operation*”. The disposal group is reflected in the SoFP. All the assets of the disposal group will be included in a single line “Non-current assets classified as held for sale*” within current assets. Similarly, all the liabilities of the disposal group will be included in a single line “Liabilities directly associated with non-current assets classified as held for sale*” within current liabilities.
* These captions come straight out of IFRS 5.Okay,
So being that it is a discontinued operation, we have to think about the assets and liabilities in the division and this is why we address the disposal group ROMM?
2. In my answer I also included that IFRS 5 requires disclosures in the notes regarding : the description and circumstances of disposal, any impairment losses AND detailed disclosure of revenue, expenses , income taxes in the notes or in the SOCI. There is a ROMM that these detailed disclosures were not made. Would I get a mark for this?
Also when describing criteria of classified as held for sale. can you just say “where assets are ready for immediate sale in their present condition and sale is highly probable within 12 months of being classified as held for sale ” I have seen this being used in some past papers and others list all criteria.
or do we have to list all criteria?
Yes it would get credit but rather than say “were not made” it is better to use words that the marker will immediately associate with ROMM like “incomplete” or “omitted”. There are relatively few marks for mere regurgitation of knowledge so it’s only worth stating something that you can make use of/add value to.
- The topic ‘ROMM IFRS 5’ is closed to new replies.